In a hard-hitting 172-page order, the NCLAT has upheld the plea of Cyrus Mistry and has termed the entire affair of his ouster to be illegal
Mumbai: It was in mid-2012, that a selection panel of the Tata Group, chose Cyrus Mistry to be the Chairman of Tata Sons Ltd., the holding company of the now USD 110 bn. Tata Group, to succeed the retiring Ratan Tata. His family has been a minority shareholder of Tata Sons for 50 years and holds an 18.5% stake in it. He was its sixth chairman and only the second non-Tata to be appointed its chairman. When he came to the chairman, the Board was packed with persons who can be called Ratan Tata’s men. He inherited a legacy of botched mega investments and forays by the Tata Group, during the tenure of Ratan Tata, which included the disastrous acquisition of Corus Steel UK for about USD 15bn and failed huge investments in Tata Power, Tata Teleservices and Indian Hotels, including questionable loans to the controversial Sivasankaran, all of which had saddled the group with huge debt and losses and had eroded its return on investments. He commenced a clean up of the Tata companies and their stressed finances and till as late as June 2016, the board applauded his good performance. But his clean up act apparently took him to the doorstep of Ratan Tata and thus suddenly, in a board meeting held on 24.10.16, without any prior notice or proper discussion, he was unceremoniously sacked as the chairman of Tata Sons Ltd., with all independent directors to participating in this corporate coup, which was blatantly in violation of corporate governance and principles of natural justice. And thereafter, to thwart any further scrutiny or compliances, Tata Sons was surreptitiously converted from a public company to a private one.
The sacking of Cyrus Mistry was clearly in violation of the Companies Act and two companies from the SP stable ie. Cyrus Investments and Sterling Investments filed a petition before the NCLT, alleging that there has been gross oppression and mismanagement of the minority shareholders and seeking that the sacking of Mistry and the conversion of Tata Sons into a private company be held illegal. The NCLT dismissed the petition of the SP Group in April 2017, leading to its appeal before the NCLAT.
In a hard-hitting 172-page order, the NCLAT has upheld the plea of Cyrus Mistry and has termed the entire affair of his ouster to be illegal.